[PCB Information Network] February 4 – In recent days, the fight against the novel coronavirus epidemic has affected each of us. To minimize the risk of infection, it is necessary to avoid large-scale movement and gatherings of people. As a result, a series of measures have been implemented, including extended business resumption and shutdowns, impacting various industries to varying degrees. The circuit board industry, as an important part of the electronic information industry, has also inevitably been affected.
Delayed Resumption May Lead to Insufficient Production Capacity
To effectively control the novel coronavirus epidemic, the State Council decided to extend the Spring Festival holiday until February 3. Subsequently, many local governments further decided to postpone the resumption of businesses until no earlier than 24:00 on February 9, with many areas delaying resumption by more than a week.
The circuit board industry chain is mostly located in the Yangtze River Delta and Pearl River Delta regions. As a result, companies in the industry are expected to face risks of reduced production capacity utilization due to delays in the timely return of production personnel in February.
At the same time, due to transportation disruptions and upstream supply chain companies facing resumption pressures, some enterprises will also face risks of insufficient raw material supply.
In this situation, companies with high automation levels, those supplying components for medical supplies needed during the epidemic, R&D-driven companies, and those skilled in cost control are relatively less affected by the epidemic.
Cash Flow May Become Critical
Shutdowns mean no income, but at the same time, PCB companies still have to pay employee salaries (circuit board manufacturing companies are labor-intensive, with labor costs accounting for a significant proportion), along with fixed expenses such as rent, utilities, and interest, the operational pressure on companies is considerable.
Especially for small and medium-sized enterprises with weak risk resistance, they feel as if they are walking on thin ice.
Additionally, operational interruptions may lead to breaches of order contracts, which will disrupt the income and cash flow of companies, potentially causing a cash flow crisis.
However, PCB listed companies with relatively sufficient funds are less affected.
Short-term Domestic Downstream Demand is Suppressed
The downstream applications of the PCB industry chain are mainly divided into automotive electronics, communications, computers, consumer electronics, defense aviation, and industrial control medical fields.
To effectively control the epidemic, local governments may implement mandatory or recommended isolation measures, which have partially suppressed the demand for domestic terminals such as mobile phones.
According to professionals, mobile phones have a certain optional consumption attribute. The panic caused by the epidemic and reduced frequency of going out have suppressed some consumers’ demand for upgrading their devices. The sales of mobile phones in Q1 may see a significant decline, with brands that have a higher online market share being relatively less affected; furthermore, the epidemic may affect the release and launch rhythm of major brands’ 5G mobile phones.
WHO Declares the 2019 Novel Coronavirus Epidemic as a Public Health Emergency of International Concern (PHEIC)
Additionally, on January 31, 2020, the WHO declared the 2019 novel coronavirus epidemic as a PHEIC, but did not recommend that governments impose “any travel or trade restrictions,” thus current export demand remains stable. However, our reporters have noted that some countries have reacted excessively to the epidemic in China, taking overreaching measures, so the subsequent impact remains to be observed.
The Long-term Demand for the Circuit Board Market Remains Positive
It is worth emphasizing that the demand for electronic products, especially consumer electronics, has now become a necessity in people’s daily work and life. Circuit boards, as key components of electronic products, continue to see positive market demand. Although short-term offline experiential consumption has been impacted due to the epidemic, we believe that the demand is only delayed, not disappeared, and we are confident that related demand will recover after the epidemic subsides.
Notably, some products in specific electronic sub-sectors have seen explosive growth in demand during this pneumonia epidemic, such as infrared temperature measurement products. Temperature detection is the first line of defense in epidemic prevention, and infrared temperature measurement plays an important role in identifying suspected patients in public places. Due to the impact of this novel coronavirus epidemic, the demand for non-contact temperature measurement instruments such as infrared thermometers in public places like hospitals, high-speed rail, airports, and subways is significantly increasing, which positively affects PCBs as supporting components.
Overall, this epidemic will have a significant impact on small and medium-sized enterprises in the circuit board industry (but the duration should not be too long), as the onset of the epidemic was completely unanticipated, and everyone was unprepared both psychologically and strategically, especially with insufficient cash reserves. Some companies may face a cash flow break crisis.
This requires the government and small and medium-sized enterprises to work together. During this special period, the government should play a leading role, introducing corresponding policies and measures to help small and medium-sized enterprises through difficulties. Meanwhile, enterprises themselves should focus on cost control and establish a comprehensive awareness of the industrial chain, supporting each other and coexisting, using resilience and persistence to overcome difficulties.
We also particularly call on all employees of enterprises to face adversity together with their companies during this special period!
No winter is insurmountable, and no spring will not come.
Today is already the beginning of spring. May the epidemic dissipate soon, the mountains and rivers remain intact, and peace prevail among people!
Special report by PCB Information Network. Please indicate the source when reprinting.
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